Menu
Simple financial 🌟
what is mean by work in process and work in progress what is the difference between these two things give some practical examples
Replies (1)
| Both terms are often used interchangeably, but in accounting and manufacturing contexts there is a subtle distinction: 1. Work in Process (WIP): Refers to goods that are partially completed within a continuous/flow manufacturing environment. The transformation is rapid and items move quickly from one stage to the next. Example: A car assembly line where engine, body, and interiors are being fitted simultaneously — at any point, multiple cars are in various stages of completion. 2. Work in Progress: Broader term used in project-based or long-duration work where completion spans a longer time period. More common in construction, software, or custom orders. Example: A multi-storey building under construction or a long-term infrastructure project. 3. Accounting Treatment (Ind AS/GAAP): Both are shown under Inventories in the balance sheet. Valued at cost incurred to date (raw material + labour + overheads allocated). For long-term construction contracts, Ind AS 115 (Revenue from Contracts with Customers) governs how and when revenue is recognized, and the balance shows as Contract Asset / WIP. 4. Practical Examples: - Furniture manufacturing mid-assembly = Work in Process - A road construction project 60% complete = Work in Progress - Audit report half-drafted = Work in Progress (in a CA firm context) In practice, both terms are used synonymously and ICAI study material uses 'Work in Process' for manufacturing and 'Work in Progress' for service/project-based contexts. |
Recent Topics :
- Bank balance in ITR-3
- INCLUDING PROFITS FROM REIT / INVIT IN SHARE TRADI
- Tempsens Instruments IPO GMP Allotment Listing dat
- Upload Type - Correction. Not showing in TDS filli
- Partnership tax audit query
- ERROR SHOWING PARTNER REMUNERATION ITR 3 TIME OF V
- Form 146 foreign remittance us citizen
- GST 16(2) notice
- Which GSTR-1 upload error do you hit most often?
- Need advice regarding accounting fees
Related Topics :
CAclubindia
